Apple v. Pepper, Kavanaugh v. Gorsuch: Here’s a Howdy Do

You probably wouldn’t want to leave your daughter alone with Brett Kavanaugh, but it’s looking like he might turn out to be not the world’s worst Supreme Court justice.

In Apple v. Pepper, decided today, Kavanaugh not only joined with the Court’s four liberals to hand an initial victory to consumer class action plaintiffs, he also wrote the opinion for the majority. Justice Gorsuch joined with the Chief Justice and the two other wingnuts in dissent. Their interpretation of antitrust standing would have shitcanned consumers, to the enrichment of plutocrats.

Apple’s App Store Monopoly

If you want an app for your iPhone, you have to buy it from Apple, at its App Store. You can’t get it anywhere else. And Apple has some rules for developers: you have to pay Apple a 30 percent commission on sales, and your price has to end in 99 cents. Subject to those rules, you can set whatever price you want, and you can sell as many apps as you can persuade people to buy, and Apple will remit the proceeds of the sale—less, of course, the 30 percent commission.

The district court allowed a class action of plaintiff iPhone owners to proceed, on the theory that Apple had unlawfully created, maintained, and profited from a monopoly in the retail sale of iPhone apps.*

How to Apply an Old—and Wrongly Decided—Precedent?

In 1977 the Supreme Court decided Illinois Brick Co. v. Illinois, ruling that only direct purchasers may maintain antitrust litigation to recover damages in the nature of an “anticompetitive overcharge.” I used to be a great fan of the Illinois Brick decision, but I was wrong. The Court’s decision was based on some pretty sophisticated reasoning about economics and efficiency in litigation, but it was wrong because it generally produced unjust results. “Direct purchasers,” such as wholesalers, typically pass on most or all of the “overcharge,” but the Illinois Brickdecision rewarded the middlemen while leaving the ultimate consumers out in the cold, and holding the bag. Because it was unjust, the decision resulted inconsiderable legal chaos. (I don’t want to prolong this post by elaborating. Just trust me on this.)

Now, back to the current case: Apple against the consumer class. Apple tried to get the case thrown out because (so it said) the real direct victims of its little retail monopoly were the app developers—the people who paid the exorbitant 30 percent commissions and who had to decide how much of that exorbitant price they could get away with passing on to the iPhone users.

The consumer plaintiffs, however, had a comeback argument that appealed to the four liberals and to Justice Kavanaugh. Their argument was that whatever injustice the Illinois Brick rule might work in other situations, here the plaintiff consumers were indeed direct purchasers from Apple, and paid the anticompetitive overcharge directly to Apple. They were clearly “direct purchasers.” They had a plausible case on the merits. They fit right within the literal language of the 1977 case. So let them proceed to trial.

In my view, both sides had decent technical legal arguments. But Kavanaugh’s analysis was the more persuasive, the more straightforward, and the result that best vindicated the interests of justice. Gorsuch, by contrast, did a good job twisting himself into a pretzel in an unsuccessful effort to protect a powerful defendant against a plausible antitrust claim. Gorsuch would have relied on the logic and reasoning of Illinois Brick to extend the reach of the case and apply it to a novel situation, contrary to its literal language. That’s not the way the law should work. Where a case with precedential value was wrongly decided, you don’t extent it, you limit its reach.

The Lesson: A Fine Howdy-Do?

I don’t normally write about weedy antitrust issues on Trumped Progressives. But today’s opinion, read in light of this morning’s New York Times article on Kavanaugh and Gorsuch, conveys some faint hope that Justice Kavanaugh may actually try to do justice in the forthcoming constitutional struggles.

After all the storm surrounding his nomination and confirmation, it would be, would it not, a fine howdy-do if it turns out that Brett Kavanaugh’s historical destiny is to be the deciding vote against Trump and tyranny and in favor of the checks and balances underpinning the republic?

And Before I Go

This from Doyle McManus at the L.A. Times, Suddenly, conservative lawyers are condemning Trump for abuses of power.

 

* Allegations that manufacturers are monopolizing products designed to work with the basic product are common, and have been somewhat controversial. The argument would go like this. IPhones compete heavily with android devices. And, when you’re deciding whether to by an iPhone or a Samsung phone, you may look not only at the features and price of the phone itself but also at the features and prices of the available apps that could be used with either phone. So when you lump in the android apps into the market, Apple doesn’t have a monopoly all, or so the argument would go.

But that argument wasn’t part of the Apple v. Pepper case, at least not at this stage.